good morning and welcome to "daybreak asia." i am haidi stroud-watts. shery: i am shery ahn. we will bring you the news you need to know when markets open across asia. ♪ haidi: our top stories, asia-pacific markets set for a mixed monday after their best week since november, earnings and china's latest trade data are in focus. theresa may's brexit deal faces

defeat in parliament. she says it could be the end of the controversial divorce. people putting blame squarely on president trump, they say the government should reopened to discuss a deal. -- should reopen to discuss a deal. shery: we had more strength with automakers, positive outlook from them. we have the drop in energy shares. the s&p 500 ended slightly in the red. just a little below the crucial 2600 level while the dow 24,000. 23,995, below energy shares lower as we saw $52 aow -- falling below barrel. it was back from its weeks -- worst in june.

it was another week of gains for the s&p 500 for a third consecutive week. u.s. futures to the downside of .2%. we could see pressure despite the fact we are getting more positive sentiment from u.s.-china trade talks, not to mention a more dovish fed. let's see how we are setting up for asia. looking at caution for the start of trading, a mixed start after capping the best week since november that saw regional shares at $700 billion in market value. for aussiee losses shares. industrial and consumer discretionary shares dragging so far in sydney. in new zealand we are seeing a loss of .2% for the benchmark. japanese markets are closed for the long weekend. we will see them back tuesday. we will see macro trade data and

inflation figures from india when it comes to the highlights for asia this monday. let's check in on the pound as it moves early in the asia session, edging closer to 1.29. this as theresa may enters one of her worst weeks as p.m. the pound could jump to this drug is level since may 2018 if a second referendum does it to realize -- does materialize. it could go low if there is no deal. haidi: the embattled prime minister facing this crucial week, her brexit deal facing defeat in parliament. she pulled it in december because there wasn't support on -- she says it could end support. now she says it could end brexit altogether. shery: she says a vote against

her deal would be a vote against brexit. kathleen: if there is a vote against the deal after months of trying to put a deal together, it doesn't seem all the more likely that perhaps someone will get closer to calling for a second referendum. it is important to preface all of this. it is one thing to vote for brexit two years ago, now to see the damages in the financial services industry and more, a lot of people think it wouldn't be a bad thing. theresa may is set to give a speech at stoke on trent. this is important because this was the region of the u.k. that had the biggest percentage of people voting for brexit to leave the european union. theresa may's office has released key parts which suggest if you don't vote for my deal, you could end up killing this

brexit which the people want. let's look at a quote i want to pull from you from her speech where it kind of sums up this. what if we found ourselves in a situation where parliament try to take the u.k. out of the e.u. in opposition to remain vote? they say politicians would suffer catastrophic harm. we will have the duty to implement the result of the referendum. reported inimes keyon that she mp's -- mp's are working to take control of the whole deal and negotiation after it gets voted down. that is expected. we also know, an interesting story, the e.u. is preparing for a potential brexit delay until july. the president of the e.u. donald

tusk is getting ready for a preliminary vote that would extend, give theresa time to go back to parliament and try again to get some kind of deal that will work. anyway,be interesting and all of this back and forth and intrigue, palace intrigue, is putting focus on it. a story that stuck out for me, sophie was talking about the pound. a big hedge fund manager in the u.k. who made a lot of money on the pound falling on the vote to leave is saying he thinks there will be a second referendum. they will stay and he will take money going long on the pound. e.u. will expect a request for extension to the end of march deadline. what do we know about the timetable? kathleen: i can tell you about that this week. day for negotiation is tomorrow. tuesday, day five, the

meaningful vote on theresa may's deal. she will have given her speech by then. wednesday if it is rejected, she will head back to brussels for further concessions from the e.u. monday, january 21, expect a common vote on plan b, and on march 29 -- this is important -- the u.k. leaves the e.u. unless bmps have delayed or canceled -- the mp's have delayed or canceled the deal. you know jeremy corbyn, the head of the opposition, he wants to call for a second election, hoping to get the labour party ensconced as prime minister ultimately. i think theresa may has put the in the court of the members of parliament who are members of her own party who will oppose this. seems to be not really helping

get it through but helping to stymie it and put something else in place. shery: we know of huge economic pressures for the u.k., the boe warning of the pound slumping, home prices, but what about trading partners and investors worldwide? kathleen: people will make that's on the pound. that -- bets on the pound. they will make in either direction. australia has a lot to lose from this because australia, one of the biggest winemakers in the world, the pound is 1/5 of their market. not only do they supply a lot of wine to britain, they also ship wine in bulk from australia to the u.k. where they put it in bottles and ship to the rest of europe. it is a big market and important . $19.6 billion as you can see on the screen and they are stockpiling their supplies now,

everyone is aware if there is a no deal brexit, trucks will be piling up in dover. no one knows what will happen. that is one example. you could go around the world and find many companies and industries that are connected to the u.k. as a gateway to europe. if that shuts down, a lot of dislocation. in the u.s. the partial government shutdown has lasted a record 23 days. for each of those days, there is no sign it will end. haidi: senator lindsey graham has floated one proposal. >> i tried to see if we could open the government for a , anded time to negotiate the president says let's make a deal, then open the government. nancy pelosi said even if he opened the government, i wouldn't fund a wall. that is why i am depressed. haidi: ros krasny joins us from

washington. there are a few depressed people , including journalists. is this temporary reopening likely to gain any traction? ros: it is unlikely. there is a sense president trump will listen to the last person he spoke to an take guidance from that person. if lindsay is the last to talk to him, that is the case. said, it doesn't look like president trump wants to go down that road. lindsey graham had a plan he calls wall plus, that seems to be similar to other more comprehensive immigration plans that have gone before and faltered, where they will be protections for the so-called dreamers in return to funding for the wall. democrats are unwavering in their stance that open the government and then we can talk.

they say they are for border security but don't want the wall . into the fourth week of the shutdown, not a lot of change in position. one thing we don't know is where the senate majority leader mitch mcconnell stands on this. there is -- if mcconnell were to the senate back into session and to vote on the funding built the democratic led house has passed, that would force the issue. he doesn't seem inclined to do that, although opinion polls show republicans are getting the bulk of the blame. president trump has been changing in his rhetoric over the weekend. yesterday he tweeted numerous times about a humanitarian crisis on the border. today it was more hard edged, vintage 2015 talking about criminals and drugs flowing over

the border. that suggests he has dug in on his position. shery: the original theme of his campaign. we have new reports from the -- washingtones post and new york times over the white house counsel. what was the response? ros: he pushed back -- president trump pushed back in a fox news appearance. they said the fbi was concerned about what was going on about at the white house after the firing of james comey in 2019 and actually opened an investigation into president trump. the washington post reported trump has held back from having transcripts of his conversations with russian president vladimir putin being put into any official record. as we came to air, the wall street journal had a story

saying the first time president trump met with putin, there was no notetaker at all. that has to mcgrath riled up again. in the first instance this week i'm of a have a chance to question -- this week, they have a chance to question the incoming attorney general nominee on where he stands on the investigation and letting robert mueller probe into trump. he has called the probe misconceived. there will be some hard questions for him. watch the senate judiciary committee monday and tuesday. shery: ros krasny with the latest on president trump and political reports out of the new york times and washington post. now first word news. the government of greece is unraveling, prompting the prime minister to call a confidence vote that could trigger an early election.

the defense minister has withdrawn his party from [indiscernible] region. they are planning a confidence vote on wednesday that could end the left's four years in power. mike pompeo has arrived in riyadh saying the isolation of qatar has gone on too long. all sides to cooperate in a dispute harming mutual interests. saudi arabia, the uae and others cut ties in 2017, accusing doha of supporting terror groups. pompeo said riyadh should take steps to end the war in yemen. huawei has fired a sales director arrested in poland on suspicion of spying. the chinese company entered beef -- acted before the person entered a plea. they have been undergoing scrutiny in several western countries, with people saying they use equipment to spy.

huawei has said all its products are safe. spacex will cut about 10% of its workforce, the vast majority of 6000 based at its headquarters in california. others working in seattle, florida, and texas. 577 jobs in california including construction -- including production managers, machinists -- infantry staff area staff. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am paul allen. this is bloomberg. onry: the impact on brexit forex. a senior currency economist plus us later this hour, the effect on asia. we speak to -- this is bloomberg. ♪

this is daybreak asia. i am haidi stroud-watts. shery: i am shery ahn. we are waiting for chinese traded data -- trade data expected monday with growth 2%.cting to slow to despite concerns, our next guest says the world should prepare for a new asia first regime. haidi: the future is asia, also the managing partner of a strategic firm. he joins us from singapore per your we last spoke at the world economy forum in sydney. we talked about supply chains and trade flows across asia, but i am wondering even if we get a beat with chinese trade and a managed moderation with the slowdown, there is a chance this strategic battle will go on for the next 10, 20 years. what does it mean in terms of opportunities and risks for

asian economies? >> that is exactly right. i am glad you pointed out this in dynamicerm play and it doesn't just confirm this -- doesn't just involve the u.s. and china. there are multiple players, like europe and asean. europe trying to substitute for american suppliers and their -- their costs rise because of reciprocal tariffs, so there are many players and it will play out over not just a quarterly basis but really the next decade or more. we can also look backwards and since the asian financial crisis done a good job ringing down its own barriers. one of the things happening this year is the passage, agreement of comprehensive economic

partnership. tpp has gone into effect. people are saying how can we substitute as much as possible for the politically risky suppliers and trade with the u.s. because of the trump export controls? haidi: you have economies across asia that have attracted india and that could make up for the slackening in the chinese economy. isn't it the case, supply chains what they are and supply-demand what it is, china sees the rest of the world catch a cold? parag: yes and no. if you go back to the financial crisis, asia integration had self-sufficient in the sense of trade with goods

it and each other. you could go back to the 1990's when west asian oil exporters began to be the large exporters to east asia. isn't bad for the rest of asia. you look at how multinationals are realizing they had too many eggs in the china basket. they need to divert investment but also focused investments on these countries from india through southeast asia. that is 2.5 billion people. you mentioned the younger demographics and the rapid urbanization and digitization in these economies for they .epresent enormous potential these 2.5 billion people, if they grow only half the rate alreadys -- india is faster than china, but let's say this growth at only 5%. it will china's current gdp in less than a decade. these are markets we have overlooked for far too long.

shery: if we see the rivalry continue, does that mean we will see more decoupling of asian nations from china? could we see more dependence with inter-region trade growing? intraregional see trade growing. graphiced that info earlier. tophows china's drop -- trading partners are already its fellow neighbors. trading with japan, south korea, , it alreadydonesia exceeds the rest of the world. the second is the european union. the third most important is the u.s. in beijing, you have been saying for a less expense -- for the last six months, our third most important part launched a war against us, so let's do what we

can with fellow neighbors to acquire high-tech goods from japan, south korea, taiwan, whatever the case may be. from europe, they are looking to aggressively help asia to decouple from any residual dependence on the u.s. by focusing on its high-tech exports, infrastructure goods. european companies and governments have been eager to join the infrastructure investment bank and are participants in the belt and road initiative. europe is trying hard to fast-track fda's with japan, n, and india.asea they are -- trade is generating major vectors, far larger than asian trade with the united states. that is set to grow to $2 trillion in the coming years.

shery: we are seeing the commerceshery: minister of china talking about making this resolution of trade tensions the 2019.iority for have you seen enough in terms of concessions that could satisfy the united states? parag: that is a great question. rolling back reciprocal tariff measures implemented. opening the automated of -- automotive market, but financial flows are more important in the grand scheme of things than the trade volumes and china is taking a number of steps opening up its bond market, capital account, lifting, raising caps on foreign investment. we have the global community is excited, even as the market

decelerates. and different policies are implemented more aggressively from the rest of asia. there is collective learning across asian countries, and there is a lot of growth left to be captured in china and the other fast-growing regions that i think deserve attention alongside china. the author of "the future is asian." plenty more to come. this is bloomberg. ♪ bloomberg. ♪

shery: taking a look at live pictures from the international the dragonion as prepares to depart. it has been here five weeks after delivering 2.5 tons of supplies. 16th resupplythe

mission for spacex. the company is planning to carry human crews to the station using dragon. a demonstration flight is targeted for later this month. shery: plenty more to come. this is bloomberg. ♪ his is bloomberg. ♪ amazon prime video is now on xfinity x1.

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dobry -- are watching "daybreak asia." theresa may will warn the u.k. parliament will kill brexit if her vote -- a deal is voted down. she will say such a scenario will be catastrophic for the democracy. the sunday times says some lawmakers will seize control of the parliament to allow the extension for the deadline. the new poll suggests half of america blames president trump for a record government shutdown. a survey says 53% of responses blame the president and

republicans in congress and 29% blame democrats. the poll finds more than half of those surveyed are against the declaration of a national emergency to fund the border wall. former detained german carlos ghosn has had to fight against harsh treatment of her husband, saying he is being interrogated with no lawyer present. she said her husband only have limited opportunity to confer with his legal team and has lost seven kilograms in eight weeks. emmanuel macron is reaching out to angry protesters to dissipate their fury without derailing the reforms the country needs. he laid out topics for discussion and insists he won't have new taxes. ae yellow jackets have been wide-ranging -- have become a wide-ranging protest.

is european commission -- 40% of the loan converted into shares. the finance ministry and railroad operator operating the airline. their new business plan would focus on long haul. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. allen.ul this is bloomberg. shery: we could see a mixed trading session in asia. we see some cautious optimism of course. the wall street session finished with a win. here is sophie kamaruddin. sophie: aussie shares after down friday are resuming gains. they are being led higher by it communication -- by communication and industrials. there is discretion for energy stocks and the aussie dollar retreating from a one-month high

of andi ahead inflationary report. the aussie heading lower after its best week since november. australian bonds are rising for a third straight day to send the 10 year yield back below two point 3%. looking at stock movers, ground.rs losing they warned that department store earnings will fall after disappointing first-half sales from kmart. wesfarmers saying it expects to australian.llion is up 6.1% after declaring commercial production up in mozambique, ahead of a january 3 quarterly update. we also want to highlight healy us which is adding to friday's event. the operator continues talks with jungle group over a takeover offer but credit suisse says even if they do entertain a

new offer from the big shareholder, it faces a significant risk of being rejected by authorities. haidi: sophie kamaruddin on the off -- on the markets. oil prices moving, surging 20% from december lows, a two-year low. we are hearing from the major producers talking about crude at $60 a barrel. shery: they say they have done enough to balance the market and will do more if needed. >> i feel we are the opec of consumers against the opec of producer, and consumers are winning. [laughter] haidi: a bloomberg energy reporter joins us now, also the sydney deputy bureau chief. seeing $60 acers barrel. we saw a faltering friday. ground for confidence?

reporter: that is right. part of the reason for the optimism is going into the second quarter, it is a time where demand doesn't pick up. they think it will provide [indiscernible] in prices. the u.s. sanctions on iran, the waivers president trump will have for countries continuing to trade that oil, they could expire in the second quarter which could put upward pressure on prices. oman's oil minister said they for crude is going to stabilize in the coming months. certainly have been signed a production cuts from last year's turning to filter through and stabilizing around his levels. levels. shery: what is the risk? >> that it doesn't materialize

or not to the extent the producers are expecting. china concerns have been around and that [indiscernible] we aren't going to get more of those especially if --de talks for the u.s. stuff seems to be going ok but what will happen? the other important factor is shale producers continue to pump out production electric -- record levels. that could put a ceiling on the price. they don't want it to go low either. and reduction cuts are helping shale producers which is true. those levels are quite high. which could put a lid on prices going forward. haidi: thank you so much for that. james thornhill there in sydney. china's 2019 to do list includes tackling friction with the u.s. and opening its doors to more foreign investment. shery: the commerce minister's

comments followed days that appeared to ease market fears. what else did the minister have to say? course saying that particular focus is tackling trade tensions with a u.s., he said of a desire to work with u.s. states, cities and business theps to stabilize u.s.-china relationship. there was also comments from the commerce minister with a news agency talking about the desire and determination to reduce the negative list, the list of sectors and businesses that are off-limits for foreign investors, that is something the europeansrations and have been pushing for. they also say they will open up further this sector and create further industries and businesses where people could have 100% ownership.

groups havegiven their applications ignored to process renminbi. that could be another sore point between these two sides as trade tensions. -- trade tensions continue. another point for this, the focus moves to the vice premier to washington expected to visit. -- vice premier going to washington. lobby groups are pressuring trump to ensure he doesn't go soft on china. that is interesting to see how much of that crescendo of noise builds up from lawmakers on both sides as we look toward the march 1 deadline. shery: we are still awaiting china trade data that is supposed to come out and

expecting a frontloading effect we have had recently to fade away after november exports rose 5% on year. haidi: one part of that is the slowdown in china's auto sector. analysts predicting doom and gloom but one big auto industry optimistic,irly general motors. they are saying that trend could be reversed, forecasting a surprise profit. ramy inocencio has the details looking at the international auto show in detroit. why are we seeing optimism? ramy: the u.s. markets according to gm say they will be ok. the china market as well, slight dip. cost cuts which i will walk you through as well. look at where we ended at the friday close. the last time it was up here was about five weeks ago, jumping 5%. it had been as high as 9% in

midday trading but investors were really brought up by everything gm was saying in positivity. let me get you details. , $6.50 toarnings $7.50 is the range they will say. was $5.92. estimate we know it ist, coming off a boil, but there is a shift from sedans and light vehicles to bigger trucks. china markets are expecting a slight dip, but the infosys is on slight. .- emphasis is on slight they are thinking of cutting five plants. in 2019 that could save them $2.5 billion to go to their bottom line. in 2020 that could grow to $6 billion in additional profits.

they don't want to end there. earlier we spoke to mary barra, the ceo. >> we still have more work to do. i made the announcement at the end of last year. we are focused on this transformation to make sure general motors is strong and demonstrating even in a cyclical is this weekend continue to deliver results. the emotion is coming from general motors but it wasn't just them saying it wasn't all bad. bloomberg television also spoke d to talk about what is happening in terms of possible recessions. jim hackett didn't see any. >> the auto business will be solid. the economy itself has signals that create uneasiness, but i don't think there is any markers that would say we are going into any kind of recession. toy: no recession according

jim hackett. we do have this outlook in terms of what possibilities are out there. one out of four people not in -- [indiscernible] but is the highest in the past several years. thatng ahead, there is shift i was mentioning earlier in terms of what is happening to ford andst with gm but volkswagen pushing ahead to the suv's, pickup trucks and electric vehicles. outlook,at rosy without be the exception? morgan stanley -- good that be be exception -- could that the exception? morgan stanley and others were not uplifting. ramy: it is totally bearish. let me run you through what three of these outlooks said. the narrative is the same.

i want sachs, the stress to put here is a negative set up for company guidance announcements. they say it could be another difficult year. morgan stanley, look at what they are saying. they say for consensus estimates , the guide to profit levels materially lowered. there is no positive wording in any of these. also baird something similar, negative estimates to overshadow any confidence opportunity. looking ahead for 2019, toyota saw 23sumer edge, we million sold in the country in , that could fall below 17 million. one more chart is looking at the light vehicle sales. this is a story of transition. 0.3 percentt grew

into the fourth quarter last year. that was the biggest fallout of all or quarter -- all four quarters. looking ahead to this year they say it could fall as low as $16.5 million. optimism from gm, some from ford, but when the analysts come together, it is a different picture. shery: theresa may's last-ditch appeal for her brexit plan, ahead of a crucial parliamentary vote tuesday. haidi: looking at the outlook for sterling and the fx that are moving. this is bloomberg. ♪

haidi: this is daybreak asia. i am haidi stroud-watts. shery: i am shery ahn. a busy start for the markets, so let's digest it all with this economist in singapore.

we seem to be ending that tightening cycle. does that mean weakness in the dollar is in equity -- is inevitable or could we see boosts from rate hikes coming this year? i would say it is not dovish but rather more being patient. before his comments were looking for four hikes this year. ever since the nasdaq fell yearen 4%, and also the 10 moving below the fed funds rate, so i think it has sort of backed off. i think the message is the fed can afford to be patient. the dollar's ascent more on the gradual. this will probably be gentler. shery: we had a lot of political uncertainty whether broader in

the u.s., and this chart showing the dollar has really moved very closely along with president approval rating. it is under pressure now. we have the ongoing shut down in the u.s., the longest in modern history, could heightened risk off sentiment have an effect on the dollar? itlip: we like to look at more in terms of whether the shutdown will lead the u.s. to defaulting stand. there is no signs of risk of debt. at the relative basis, the u.s. is still the g3 thatonomy among the has forecast for 2%. where the rest of the world, europe, inflation is slowing down with its growth, japan is

looking at delaying its target for its inflation, so i think for the world at this juncture, it is like we are lending on the shortened runway. risk thatlot of event is coming up, brexit this week, e.u. parliament in may. and look to step back at fundamentals. all signs, growth, monetary policy, still constructive for the u.s. dollar. 2019: if you assume we see as a year where the u.s. doesn't necessarily fall into recession but growth does moderate, whether it be headwinds from the china trade war or the political implications we have seen, if you look at the dollar smile theory, it suggests a worst-case scenario for how the dollar

performed because investors will put the money overseas for higher yields. is that likely? philip: following the short drop we had seen in the nasdaq, i would be cautious on the front. the recovery we are seeing in , they couldnow bounce. we are not seeing it is one -- saying it is one, but there is an easing of the downside risk. the hawkish fed as well as the u.s.-china trade tensions, then even if we get a trade deal, i remember back in july trump had a truce with europe, but they have been slowing since. the tariff war, we are all watching for the unloading and to see how much the economy is going to slow for the first time

this year. move on to brexit, key week for theresa may. she has already come out with an extract of a speech and says it is likely to get a stop to brexit more than a no deal brexit. is that the best case scenario for the pound is a second referendum? is it likely? philip: the pound at this juncture, we see a no deal brexit as worst-case scenario. the bank of england indicated brexit could lead to the pound to drop by 25%. pricesflation, home dropping as much as 30%. that is the worst case scenario that would bring the pound closer to its 1985 low, around 1.05. at this juncture the market is holding out for a delay in terms

of brexit, so judging by theresa vote couldnts, this be bad for democracy. no mention of the economy. the market is holding out for wme delay in terms of neo--- e.u. deals. shery: is that where we are seeing strategists revise upward for sterling? it is showing here were the , then-- the pound is at for the fourth quarter of 2019 we are putting it at an upside dollar, soinst the why are strategists predicting this huge rebound in the pound? would it go too low on sterling? philip: the sterling,

forecasting it has always been a binary exercise on brexit, but a further step back, i view the brexit referendum as a very important event that has to realign the pound to the global dollar trend. the british parliament never launchthe euro when they back in 2013. also [indiscernible] to realign that. ever since then the pound has been tracking the euro or the dollar trend. i wouldn't read too much into it. in terms of the event, i would prefer to look at the euro-sterling chart that shows 88, 92 range. you would be above that, then you would be looking at a situation where the brexit is

really overtaking. skeptical inite terms of the forecast, and also very mindful -- because i have been doing [indiscernible] really it is a binary event. i prefer to look at the euro when i plot my medium-term pound outlook. shery: thank you so much. our senior currency strategist at [indiscernible] we are looking at the market -- this is bloomberg. ♪

shery: this is daybreak asia. haidi: let's take a look at what is in store with the open on monday morning in asia. there is a little quiet start even japan is off for the coming of age public holiday. sophie: we are seeing cautious

optimism in asia potentially. korean stocks, the kospi is tempted after stepping a five-week decline. there seeing a pickup with electronics sector seeing the biggest gains. that will remain in focus. keeping an eye on apple suppliers. iphonesl release new this year. mullingle is pulling -- samsung and others for new chips. the company could begin operations at its number two reduction line in china within -- production line within china. there is increased demand for the second half of 2020. also looking at kia motors after they were downgraded to hold. shery: thank you for that. in the next hour of daybreak asia we are live at the asian financial forum in hong kong.

we will speak to the ceo of one of china's biggest peer-to-peer lenders. we also have an exclusive conversation with one of the pioneers of private equity investment in china. this is bloomberg. ♪ ♪

to "daybreak: asia." shery: we will bring you news from across asia. haidi: our top stories are mixed markets. earnings as well as china's latest trade numbers are in focus. the brexit deal faces defeat in parliament.

that could be the end of the controversy altogether. shery: and we are live at the financial form in hong kong. let's see how we are setting up the market open. let's go to sophie kamaruddin. need take a look at the spread last week, it moved higher for the week, gaining an market value. keep in mind the japanese markets are off-line for the long weekend. we are seeing the markets open. when it comes to what we might have on the agenda, we do have the aussie dollar weaker ahead of that weakness. we do see some weakness coming through since july 2005.

we will keep a close eye on the sterling. week.lch was -- a tumultuous week. haidi: let's get to paul allen in sydney. may with a speech on monday that the parliament will kill brexit. facerime minister will such a scenario which would be catastrophic. some lawmakers are playing to seize control sellout parliament to extend. president trump has treated that the u.s. military has begun to .as raw from syria something that is long overdue. but there is will be hit by attacks.

he added that he would devastate turkey economically it president brca 1 carried out -- president erdogan carried out his threat. the defense minister has withdrawn his party from the coalition. tentatively planning a confidence vote that could last arrested in poland on on suspicion of spying. it has brought them into disrepute and has been undergoing scrutiny in several western countries. they have rejected all such accusations, saying their products are safe.

wall street journal says the request called concern. although the assessment was worsenedut, relations after president's decision to abandon the 2015 nuclear deal and impose sanctions. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. shery: bringing together financial members of the business community to exchange views and opinions. stephen engle is on the ground there for us. >> this is the asian financial forum day one.

dangerous times to be in that space, but you seem to have risen above the right. what is the situation right now in the lending space? >> we started out with a complex problem. over that period, we were able to identify entrepreneurs. capital from outside and inside. we learned how to communicate and solve that problem. in china, some of the members, the research them. 20% of that is wonderful. >> the numbers are quite staggering.

the government has come down because of various fraud cases and people losing their life savings. the industry had ballooned from nonexistence to such a large industry in the last couple of years. how much rationalization has there been? how much will their steel -- will there still be? it is impossible to have even in a country like china. the interesting part is the process of how we got from that large number. what i like about the regulators, instead of saying to percent survived, it is a protest that guided the company naturally, those that do not fit

, we try to correspond to other business models. industry down to what they say by the end of this year could be fewer than 300? does that mean there will be less money out there? does that mean more lending for you because of the situation? >> i think there will be more. we were busy building the infrastructure. not only our companies and businesses, but also the traditional industry. it is going in the right direction. what about the new compliance measures? had is that affect you? >> they will always be together.

of one day there will be a license -- that is not a reality. to itve to pay attention all the time. it has been one of the leading companies. how many players do you expect to be in the industry by you saidf the year #>> that -- he said the tough times are starting to an. >> there are difficulties under pressure. after that, especially around the end of the year, investors are coming back. it is going down. is the regulation an ongoing

process? i do not like to associate it with tightening. this round of regulation was aimed at tightening of some of the malfeasance. >> they are not compliant. no negotiation. when we have a wool, everybody has to follow it. they allow the players to get bigger and bigger. industries. many regulation and tightening are not always together area -- together. >> there is obviously some

pressure and a lot of enterprises. where do you see the most demand needed given the conditions in the chinese economy? >> it is not a bad thing. there is a growing economy. is pressure from the trade challenges or there isn't, they have -- demand has always been there. not even 20% of them, so we still have 80% as we are still trying to come up with models. are there conditions of one didn't twice shy? if you are an entrepreneur, you have to look at them over a period of 10 years.

focusing on capital. it, it has done great things. they are not things that should go to waste. building what we will have in the next one or two decades. $40 million or so. i have to get to the million dollar question. yet been saying maybe next year or in two years. the market has not treated china very well lately. of your questions are linked together. i prefer a presentation for my investors.

i would like to be able to say yes. we do not need an ipo anytime soon. we will keep our options open. thank you so much for your time. we have a packed day in hong kong. sending it back to you for now. speaking at the asian financial forum in hong kong. we will be back with him shortly with more conversations. some breaking news crossing the bloomberg. 6 billion singapore dollars. forading asian provider solutions operating across that space. a large portfolio in india as well.

still ahead, we will be back in the asian financial forum in hong kong and take exclusively to victor chu. on flowspact of brexit because theresa may still needs to make that plan ahead of a crucial vote on tuesday. we will have the latest on the scenarios we are looking at next. this is bloomberg. ♪

haidi: you are watching "daybreak: asia." let's discuss what we should be watching at the beginning of this trading week. like the ongoing

topics will continue this week with trade talks and the shutdown in the u.s. absolutely. theone that is dominating early trade is the shutdown news over the weekend. those government employees missed their first paycheck. changing the thinking around the shutdown, people realize that there is an economic event that will hurt the longer it lasts. aboutnot need to worry march 1 because that is not a hard deadline. this is hurting growth. it is hurting equities a little bit. we will soon be distracted by brexit noise. haidi: that looks like the volatility basket case. the worst-case scenario would be a no deal brexit?

>> that probably is the case. no deal brexit is the worst-case and the best case is in debate. one of the things that seems almost certain is that we are having this vote that it is expected to fail. nobody thinks that the vote will pass. how does it play out? we're not really trading the vote. do not expect much tomorrow. positive thatthe passes. tomorrowhat going into , the sterling might be relatively stable to a little bit positive as we go into the vote and then the rest of the week we get the real volatility. thank you so much. a lot to look forward to this week. let's talk more about brexit.

this criticalcing make or break week. the deal is facing defeat in parliament that could potential -- potentially put her out of a job. shery: kathleen hays is here with parts of that 11th hours each that they will deliver on monday. warning that a vote against her would be a vote against brexit itself. kathleen: there is so much going on about recent a. weekend, there is partyp from her own campaigning to take over the brexit deal if and when it is defeated. probably tomorrow. this is an important excerpt from the speech. we know it is because her office released it.

what we found ourselves in a situation where they tried to take the you can add of it? we all have a duty to implement the result of the referendum. a lot of people are wondering if the british people know the cost of brexit. maybe a second referendum would have a different outcome. this comes after a report that i was telling you about. cabinet ministers are pleading and the guardian is talking about something that has already been discussed, which is the eu extending their march 29 deadline for the withdrawal, assuming that the deal fails. we know that labor has been

looking at this, sitting around an issue of a no-confidence vote. jeremy corbyn was on the bbc earlier. here is what he said when he was asked. do you immediately put down a vote of no-confidence? choosing,me of our but it will be soon, do not worry about that. kathleen: now a story from the daily telegraph. that's been so much going on in the last few hours. they will publish draft legislation proposing a second referendum on the u.k.'s exit from the eu. the members, including former conservative attorney dominic. he has been described as a liberal conservative because he has criticized brexit. other people joining him

including the democrat leader and others. there is a lot going on at once. everyone is assuming that the vote will fail on tuesday. haidi: what do we know in terms of the timetable russian mark kathleen: -- of the timetable? kathleen: monday, day four of the house of commons brexit debate. then we go into tuesday when it will be a meaningful vote on the theresa may deal that is not expected to pass. wednesday she is expected to meet with the eu to try to get more out of the session. looking ahead to monday of next week with another vote expected. march 29 is the deadline that is out there. eu,t is extended by the donald, already the president

talking about this and maybe that deal is not as meaningful as it was before. whether or not they had the time ande at the right place to call for a second referendum. --ecially if it includes they have suggested an op-ed piece. go, are you in favor of theresa may's deal? haidi: ongoing drama. thank you so much. you can get a roundup of the stories to get your day going on your edition. -- your terminals. it is also on our mobile app. you only have to get the news on industries and assets that you care about. this is bloomberg. ♪

haidi: this is "daybreak: asia." shery: let's get a quick check of the latest is this flash headlines. investors continue to pull money . they saw $60 million of redemption in december, lowering asset manager 50 million from february's all-time high. they have leaked for 10 consecutive month. performing under 80% of its peers. one of the leading retailers is preparing to cut jobs. they are contemplating setting out outlets. that is roughly half the stories and employees. they are expected to make a proposal in the coming weeks.

the pboc has declined these of and mastercard process payment and the yuan. the requests were put in under a year ago under a process which should have seen them make a decision within 90 days. all declined to comment on the story. haidi: let's take a look at how markets are shaping up. how are we tracking? thise: looking mixed monday. korean assets are under pressure kospi offost be -- about 1%. isle the offshore yuan yielding better than july 2005.

the aussie dollar is easing its drop. gaining ground set by a fit day of the. providing the biggest boost in sydney. inping the most since 2018 sydney, rising as much as 24%. the company performed possible sale of asset. pressure after department sales are set to disappoint. korean retail stocks are jumping the morning. , theyt comes to the hotel believe that the firm sales of trend will remain intact. shery: thank you. let's take a look at how we are tracking across major averages in asia. south korea at the moment is being a little bit of pressure for korean stocks.

this coming after gains in the last session and australian stocks in the green, gaining .3%. energy stocks are declining at the moment. this is bloomberg. ♪

is 8:30 in hong kong, and our open -- away from trading -- an hour away from trading. we have stocks with the exclusion of japan for the coming-of-age holiday. hong kong markets have had a stellar run. six days of gains. also looking at the countdown for shanghai and shenzhen. you can look at china trade numbers. from our global headquarters in new york, i am haidi stroud-watts. shery: i am shery ahn are let's get to first word news with paul allen. paul: secretary of state mike pompeo has arrived in riyadh

saying the saudi led isolation of qatar has gone on for too long. cooperate inuld the fight that is harming mutual interests. saudi arabia, bahrain and the uae cut ties with do half, according -- accusing them of -- doha, accusing them of supporting terrorism. the wife of carlos ghosn attacked the harsh treatment of her husband in tokyo, saying he is being repeatedly interrogated with no lawyer present. she said her husband has limited opportunity to talk with his legal team and have lost seven kilograms in eight weeks behind bars. early arrivals for the detroit auto show are started with a cold shower, a burst water main just as they began to host the celebration of the car very authorities are warning against

using -- the car. authorities are warning against using water to bathe or drink. several people reported skipping the show this year. spacex will cut 10% of its workforce. the vast majority of the 6000 employees are in california. others work in seattle, washington, dc, florida and texas. 577 jobs will go in california including reduction managers, propulsion specialists -- production managers, propulsion specialists and machinists. half of americans blame president trump for the record government shutdown or the washington post-abc survey said 53% blame the president and republicans in congress while 29% blame democrats. they find or than half of those surveyed are against the declaration of a national emergency to fund the border wall. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700

journalists and analysts in more than 120 countries. haidi: fitch is warning of it rating fortriple a the u.s.. this as the government shutdown stretches into a record 23rd day. shery: we will discuss more with sophie and the global head of sovereign ratings james mccormick. we have james in the studio to discuss the impacts of this government shutdown which could drag on to march 1. the debt ceiling is proving problematic. what are you anticipating with this backdrop? james: the growth outlook is not what we are concerned about. there will be a growth impact. there is not a huge amount of the government to shut down, , but meaningful.

we are concerned if the debt ceiling comes back and we get to the x days after the treasury has used extraordinary solutions and there is still not a solution. in 2013 they were getting close to the end of that, those extraordinary measures, then we put the u.s. on marine watch negative. we were 40 hours away from without a solution. we are talking about it and highlighting it is we see the difficulties with the shutdown in terms of getting an agreement. there is a heightened risk of things going wrong. sophie: are there any positive rumors dealing with the debt ceiling over the weekend? we had the likes of good lined saying the arrest -- the u.s. is floating on an ocean of debt. james: we measure gdp around $20 trillion years -- trillion, and

there is another one trillion of debt being added every year. that is a significant fiscal deterioration. this comes at a time when growth has been relatively strong. we are heading into some time of weaker growth which we are into the end of this year, maybe we start to see a weaker fiscal position still. sophie: we are seeing resilient economic indicators, robust jobs picture. how do you square that the rising risks like inflation prices? one gauge of this economic -- they see a chance of a 25% risk for a recession in the u.s., up from 20% in december and so bringing the probability to height level in six years. james: it is not what we share for 2019.

anything is possible. at the end of a normal economic cycle where you can see interest rates moving higher, that is --ically what precedes the precedes the recessions. we have had a normalization of interest rates which means a normal economic cycle. we don't see a recession this year. we still see reasonably strong growth at least in the first half of the year. we will see weaker growth at the end of the year into 2020. sophie: what is the sense of head of the u.k. elementary vote tuesday? crucial for theresa may. in flux i guess is the proper way to put it. nobody really knows what is going to happen. anyone who tells you they know is kidding you or themselves. i think even the prime minister doesn't know. news over the weekend that there

could be a legislative to having to amount the labour mp's control the government, this has been in place for more than a hundred years. it shows you how discombobulated the approach is in the u.k. there is a lot of uncertainty to be had. there is much to play for. we don't know what will happen this week or this month. sophie: with the probabilities saying there could be a new deal , second referendum, what are you more inclined to see as outcome? it will be -- it will be no deal. a second referendum is hard to envisage. we will need to see an extension of article 50, which is possible. a delay in the deadline because of referendum certainly could happen -- couldn't happen by the end of the original deadline. looks like we are heading towards some kind of corner solution. the negotiated agreement will

not be the one that rules at the end of the day. a new deal brexit or second referendum, and if we have another referendum, it is not clear who would win that. we are waiting on trade data from china. authorities could be planning to revise lower the gdp forecast within a range that could be in line with the inflation of the past year. what are you seeing? james: we shouldn't be surprised to see the growth range drifting lower. it could be confirmation of the data we see. we are not concerned about growth dipping below 6%. i don't think we will see that much. looking at a high, it is clear growth is drifting lower in china but also manufacturing going lower globally. sophie: thank yousophie: for joining us, james mccormick, fitch's global head of sovereign ratings. haidi: we will speak to the

in china, investing asking how the brexit chaos could be playing into business and investment in asia. we will be back live to the asian financial forum. this is bloomberg. ♪ this is bloomberg. ♪

shery: live from the global headquarters in new york, i am shery in. haidi: i am haidi stroud-watts. we are live at the asian financial forum taking place in hong kong. stephen engle joins us. good morning to you. we are at the asian financial forum. the backdrop is a mess. we have a mess in the trade, with brexit, in that u.s. with the government shut down. even greece is becoming a mess again. i like to bring in my good this kindtor chu with

of discussion. you can talk about all of these. which mess is bothering you the most? victor: tomorrow brexit. stephen: let's talk about that first. by all accounts theresa may is going to lose the vote in parliament. are we going to have a no deal brexit or a second referendum eventually? a second referendum is looking more likely because labor will put a no-confidence motion which is likely to prevail, which will put worcester corbyn pressure to come around to a second referendum. that will be the only elegant ensuring democracy works. otherwise there could be a sharp democratic trust. the labour party have to play this carefully if they want the voting public in the midlands to go the other

way. victor: i think europe will need to be very diplomatic and sincere to supporters. -- thatthe reaction will affect the psychology of the voters. leaving toswing of remaining. that will create positive rhetoric. stephen: you have set in past interviews a brexit is built into the chinese psyche. how are you prepared for it in the u.k.? you have a long track record of investing into the u.k., a brokerage, northernstephen: yout rock, the first round with virgin. you are also pulling out of one investment. what is your strategy? that investment unfortunately, one of the notrnmental parties was

willing to follow through with the agreement we signed a few years ago. with the extreme uncertainty of brexit we have to -- [indiscernible] investment in [indiscernible] which is very regrettable because we have lucked out. we loved the local community, but there was some technical issues that would not allow us to proceed. stephen: what kind of money? victor: a major marina, hotels, real estate, commercial, all in $75 million u.s. stephen: you are also going into the u.k., launching a virtual bank not only in the u.k. but also japan. victor: we are exploring the possibility to apply for a new virtual banking license using thin take -- fintech

capabilities we have in the u.k. and japan. we believe these markets are ripe for disruptor and contributor, particularly with chinese and asian capital into at a time brexit will discourage others to go in. stephen: we had soul htite talking about the consolidation of the rest of my station and the chinese lending space. do you see a risk in the fintech space? victor: it depends which kind. stephen: you are talking about virtual banks. victor: we are talking about bringing capital into london, using london as a platform to promote more wealth management and asianor chinese community. it would be a different kettle fish. stephen: you are also a member of airbus and there have been warnings about the trickle-down effect on the u.k. from a hard brexit. i believe there are 25 different

manufacturing facilities from airbus. they built wings in rural areas. what kind of disruptions would you see from a new deal brexit on the aviation space? global dealing with supply chain, brexit or no deal brexit is a disaster. you don't know who is accredited to do what, you know, the next day. manufacturers, subcontractors that work for multinational sectors, airbus should be prepared but were they prepared enough? that is an open question. a lot ofthere is not time left. there could be disruptions. there will be interim stopgap editors if we get to know deal, but there could be chaos. victor: that is why asian investors are fairly prepared. historically london is our natural hub for european investment. in addition to london, we must

have another have. in our case it is [indiscernible] but many friends, luxembourg, paris, frankfurt, we are quite for the, but i think manufacturers, relying on global supply chain is still a real mess. stephen: there is a lot of messes. there is a lot of volatility in the markets, a lot of pain in the chinese economy. how is that affecting where and what you invested in china. -- china? victor: we might have a leg up on trade, but there are longer-term issues. the winter of discontent will be a long one. we will have sunshine on the first of march, there will be probably some, but we need to make sure the discussions to trust the dialogue will continue. change itst going to

proven model that has delivered so much for the community over the last 40 years. stephen: you figure a deal will up the-- they will open financial services, open to more automobiles, they have already pledged these things. they will buy more soybeans and lng, which they need. will they do the concrete reforms the u.s. and other trade partners, even the e.u. have lots of issues with chinese trade practices, will they do those at the state-owned enterprise level to get the ball moving across to the gold? -- goal? victor: in terms of intellectual property rights, making sure there is a level playing field, making sure china is progressing seriously toward the system or it is in line with the long-term best interests of china, that will be coming and in that china is serious. of in their own position

2025,rialization, the promoting innovation, the ai, robotics of the world, china will not just stop because of sensitivity's from other nations. that is the national priority china believes it has a right to develop. but on the promoting rule of law, that is underlying the best interests of china. stephen: the cofounder of peach aviation, you consolidated with vanilla. you seem to be growing in the low cost carrier what is something that will drive this carrier, number three in japan? victor: we will expand our network toward asia and china. we are already in 50 destinations. we have merged with vanilla. it ane to really make asian lcc on top of being the number one in japan. stephen: thank you so much for

being with us, clearing up the messes as we begin 2019. going to send it back to you, packed day here in hong kong. shery: thank you so much. and we will be speaking to the capitalt and ceo of land. they announced the acquisition of a sentencing. we will discuss that and more. this is bloomberg. ♪ this is bloomberg. ♪

return to the breaking news we saw crossing the bloomberg earlier, capital land will play -- pay this $4.4ny in singapore billion. haidi: the capital land group president and ceo joins us now on the line. great to have you with us. what are the opportunities and the attractiveness for this deal deal? >> it is attractive on various fronts. it will be highly transformational and really position capital into the future. it is an interesting as a class and market of scale. so what the agreement asset

classes have for the new economy sectors, industrial, larger places that are driven by higher growth in tech related sectors, so it will add to the whole portfolio of capital land. that is point number one. market, of in the meaningful scale especially in the u.s. and europe, and what will help us diversify into a truly global platform allow us -- employ capital capital in a more important way. this allows us to create the biggest fund manager in asia .u.m. of $164ed a

billion singapore. we have more market choices, different asset classes to allow us to create more funds, and we the income andth the r.o.e. for capital energy groups. diversification play in terms of the type of assets. 80% is focus on business parks. withal land has struggled home sales in singapore and across china. are you hoping this will battle its out where revenue -- balance out where revenue comes from? >> i think it should. there are different skill sets and capabilities. if you look across the world, property goes in cycles. having different asset classes, asset classesross -- shery: we are seeing rate hikes federal bank in the

u.s.. many chinese banks have followed -- asian banks have followed this. have you seen impacts in your business? what we have is highly proportional, stable property. the portfolio we have from their a high ratio of income generating properties. i do not believe the interest rate hikes would affect us. if you look at how capital land has been very disciplined in terms of power asset recycling in the last few years we have $3n recycling at least billion to $4 billion in singapore dollars. that will give us leverage

making this transaction, which is highly compelling despite the market with rising interest rates. shery: what about it a government property cooling measures not like -- not just like in china but in singapore? how would this new deal help in that front? cooling measures in singapore and in china would be there, so if you look at what we have done in singapore, we withbeen selective residential land banks. we go for projects we are quite sure in terms of [indiscernible] we can deliver. in china, china is a big country. if you look at where capital land is focusing, our investment is the five key cities where urbanization is still strong and demand underlying for homes, and so far, in terms of residential

sales in china, we are attracting our target. , we havefew months acknowledged the acquisition of [indiscernible] -- future development pipeline. and for this acquisition, you have pointed out it does give us additional asset classes and a new income stream. that will give us greater stability of earnings going forward. haidi: we have run out of time. that was capital land lychee june. -- lee chee koon. markets covered continues as we start trading in china. haidi: china trade numbers on top. this is bloomberg. ♪ ♪

rishaad: 9:00 a.m. in shanghai. china is set to release its latest trade data in the next couple of hours. the effects of the trade war be closely watched. >> the company says it has been brought into just -- disrepute rishaad:. rishaad:blaming -- disrepute. rishaad: blaming the shutdown on president trump.